Canadian Employment Law Today

February 14, 2018

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian HR Reporter, a Thomson Reuters business 2018 ment specialist strengthening the Herald's non-media product. is involved spending 75 per cent of his time working in sales for Bounty Print — the Herald's print business that made products such as business cards and brochures — and 25 per cent of his time on Headline Promotions — the Herald's pro- motional products business where he would sell sports uniforms and equipment. is was part of the Herald's plan to inte- grate its print ad sales with Bounty Print and Headline Promotions sales through bun- dling their products for clients as a response to declining print ad sales. It felt Clarke was well-suited to the business development specialist position because he had drive and was good at sales. In addition, the paper had received customer service complaints about Clarke and didn't want to cause disruption for clients who had been working with oth- ers during Clarke's sick leave. e Herald set out projected sales targets for 2015 for both Bounty Print and Headline Promotions and Clarke's compensation, which would involve a base salary of $24,000 per year plus percentages of sales for both ventures. He would also receive an annual bonus if budgets for both were met. e Herald also said it would provide guaranteed compensation pro-rated to an annual salary of $66,500 for three months to help with the transition to the new role. Clarke was unprepared for this change, as he had previously had his clients returned to him when returning from sick leave. Howev- er, he agreed to follow the plan and prepared client lists for the two ventures. However, Clarke experienced some dif- ficulties in his preparations — Bounty Print customers weren't interested in a marketing plan integrating Bounty Print products with the Herald and Headline Promotions prod- ucts, and Headline Promotions prospects all had longstanding relationships with other suppliers. Clarke was also concerned with limited product lines for Headline Promo- tions. In addition, Bounty Print lost its sec- ond biggest client to a competitor, and its biggest client was the Herald itself, for which there were no commissions. Clarke drew up scenarios for his income based on meeting and not meeting targets, with the maximum being similar to his in- come in recent years, but he considered it unattainable. He believed his most realistic income projection was $20,000 less than what he made in 2014 and almost $40,000 less than what he made in 2013. Clarke told the Herald's vice-president of sales that the projections for both ventures were unrealistic, so the vice-president of sales added commission sales from another employee to the list of those for whom Clarke would earn commission. However, this didn't satisfy Clarke, so he retained counsel who wrote a letter to the Herald outlining Clarke's concerns. e letter also stated that the "unilateral transfer to a junior position" could lead to a constructive dismissal claim and he would only accept the business de- velopment specialist position if it came with a base salary of $50,000 — more than twice what the Herald proposed. e Herald rejected Clarke's base salary proposal and offered to increase the pro- rated guaranteed salary period from three to six months, starting on April 13, with a meeting after four months to review Clarke's progress. Clarke wasn't happy and resigned from his position on April 23. He then began an action for constructive dismissal. e Herald disputed Clarke's assertion the new position was a demotion and a signifi- cant change, because it still involved market- ing efforts, the same reporting structure and office, the same benefits, and the potential for similar or better compensation. e court noted that there are two parts to the test to determine constructive dis- missal: the express or implied term of the contract must be significantly breached, and would a reasonable person in the same situation as the employee feel that there was a substantial change to the terms of the em- ployment contract. e court found that while there was no written employment contract, it was not an implied term of the contract that Clarke could be unilaterally transferred from the account executive position that he had per- formed for 18 years to a newly created posi- tion. e transfer affected his compensation, duties, and responsibilities and met the first part of the test, said the court. e court also found that Clarke's du- ties changed from selling print ads in the newspaper and related publications to sell- ing printing materials for Bounty Print and sports apparel and equipment for Headline Promotions. In addition, the court found Clarke's projections for meeting targets more realistic than the Herald's — given Bounty Print's loss of a major client and the lack of sales history for Headline Promo- tions, which would result in lower compen- sation. A reasonable person in Clarke's situ- ation would find the "substantial changes to his compensation and the duties of his em- ployment" to be constructive dismissal, said the court in upholding Clarke's action. e court noted that it wasn't unreason- able for Clarke to resign his position given the circumstances and there were few op- portunities to fit his skills and compensa- tion requirements. As a result, there wasn't a failure by Clarke to mitigate his damages, the court said. e Herald was ordered to pay Clarke damages for 16 months' notice, minus income Clarke received from other em- ployment during the 16-months follow- ing the constructive dismissal, for a total of $77,761.87. See Clarke v. Halifax Herald Ltd., 2017 CarswellNS 964 (N.S. S.C.). Canadian Employment Law Today | 7 More Cases It wasn't an implied term of the contract that the employee could be unilaterally transferred away from position he had performed for 18 years Employee believed projections were too optimistic « from NEW POSITION on page 1 Employment law blog Canadian Employment Law Today invites you to check out its employment law blog, where editor Jeffrey R. Smith discusses recent cases and developments in employment law. The blog includes a tool for readers to offer their comments, so discussion is welcome and encouraged. The blog features topics such as preparing for marijuana legalization, Ontario's minimum wage change, and random drug and alcohol testing. You can view the blog at

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